Capability perspective on business network formation : Empirical evidence from the wastewater treatment industry

Purpose – The purpose of this paper is to investigate the intentional formation of business networks in the wastewater industry. It enriches the theory‐building of the formation of business networks by drawing on theoretical contributions to business networks and capabilities. The paper describes, assesses and predicts scenarios relevant to the formation of business networks in the wastewater industry. Design/methodology/approach – The research methodology employed is based on multiple sources of data in a multi‐method design, interpreting potential scenarios of business networks. Findings – The findings reveal that water scarcity, population growth and economic constrains jeopardize existing business networks in the wastewater industry. Two potential scenarios: re‐inventing the centralized system through on‐site systems for mass‐markets; and expanding on‐site systems into mass‐markets seem realizable. A comparison of the two scenarios suggests that the first scenario is in a superior position to utilize the business opportunities offered. Research limitations/implications – Research limitations arise from the qualitative nature of the research undertaken. Practical implications – Capability alignments and barriers suggest that the re‐inventing the centralized system through on‐site systems for mass‐markets scenario, is the most suitable for implementation. The knowledge gained allows managers to outline a specific approach for developing the capabilities required, in order to take advantage of the alignments and overcome the barriers that may exist. Originality/value – The paper highlights that building theories of business networks may benefit from combining the formation of business networks with dynamic and operational capabilities.